Categories: Insights

Why CXOs and business heads must understand and be involved in their organization’s digital transformation?

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In the past technologies were used in silos. CIOs mainly focused on business process automation and service delivery using information technology. COOs mainly focused on industry process automation using operational technologies. Technology was considered as enabler and mainly cost overhead. 

But due to invention of internet, high powered communication networks and other technology innovations there is convergence of information technology and operational technology. Hence technology has become now a primary driving force not just enabler. 

Now, board of directors, CXOs and Business heads are under tremendous pressure due to 3Cs – Customer, Competition and Convergence. That means technology innovations have significantly changed the needs, wants and pains of customers, created a new competition from Digital Dragons like Google, Apple, Facebook, Amazon, Microsoft (GAFAM) and tech start-ups, and created a phydigital world with the convergence of physical and digital worlds. 

Hence to address the challenges and opportunities emerge from 3Cs (Customers, Competition, Convergence) it has become imperative for organizations to bring changes in the whole anatomy of organization leveraging digital technologies. Hence there is a need to unlock the power of digitalization by digitalizing the four business clusters and 12 business building blocks as mentioned below.  

Cluster 1: Business BlueprintCluster 2: Business OperationsCluster 3: Product & Service InnovationCluster 4: Technology Foundation
Business Vision  Business Strategy  Business Model  Business OutcomesBusiness Operating Model  Business Process  WorkplaceProduct  ServiceTechnology Strategy  Technology Governance  Technology Architecture

Hence the organization leadership team must focus on the following: 

  • The Corporate strategy team must re-orient themselves to create digital business vision, digital business models, digital business strategy map and digital business outcomes to create new opportunities, new revenue streams, new customer channels and segments with high unique value proposition and differentiation. 
  • Operations team like sales, marketing, production, supply chain, customer relationship, finance, HR and others have to digitalize their processes, workplaces and operating models to improve operational efficiency and customer services
  • R&D and innovation team must innovate new products and services by unlocking the power of digital technologies to introduce new features and high value proposition ahead of competition
  • Technology team must focus on establishing digital technology foundation covering digital technology strategy, digital technology governance, digital technology architecture that are done with the fusion of Information, communication, collaboration, operational technologies. Digital technology foundation is very critical for organization’s digitalization 

Many traditional organizations which are not born digital (digital natives) and have been there in the business for many decades are called digital immigrants. The board of directors, CXOs and Business unit heads of these digital immigrants are now under tremendous pressure and they realized that now every business must be driven like a technology business and technology investments in business units must be increased to be relevant in the digital era. They also realized that digital initiatives have to be driven by board, CXOs and business unit heads and not by CIOs/ CTOs whose focus was very limited and skewed 

For example the digital technologies are now able to create new business models (platforms, market places, data driven models etc.), new operating models (virtual business operations, AI driven decision making, Smart contract based policies implementation etc.), new business strategies, new products (Connected cars, Intelligent diapers etc.), new services (Omni channel services), new workplaces (smart factories, smart retail stores, gamified work environment), and new business processes.  

Unless the CXOs and Business unit heads understand the implications of digital technologies, and the emergence of new opportunities, challenges and leaving the digitalization ownership to technology departments will fail miserably and they become the reason for the extinct of their organization in the coming years. 

Organization Digital Transformation Programs must be owned and driven by business leaders with the support for technology leaders and specialists. Majority of the technology budgets will be managed by business heads and it may be at a tune of 15-20% of revenue in the coming years. Business unit heads must drive their digital business with two eyes – 1) digital business operations management and 2) digital programs & project management. 

Unfortunately most of the business units spend 95% of their time on operations management and very limited time on programs and projects management. Program and projects are the change agents and catalysts to prepare the businesses for future. Hence business leaders have to plan to spend 70% of their effort on business operations and 30% of their effort on programs / project management. 

Especially to digitalize the organization each organization must establish a strong structure, governance, resources, capabilities to manage the digital programs and projects by the business units in addition to their digital business operations. 75% of the digital transformation programs have been failing today.  It is wakeup call for board of directors, CXOs and Business unit heads. 

Hence CXOs and business heads must understand and be involved in their organization’s Digital Transformation. All these leaders must be trained to understand the business impact of technologies to make them relevant in the digital era and to prepare their organization for the digital future. 

The article has been written by V Srinivasa Rao (VSR)
Chief Digital Advisor & Consultant | Author of Lean Digital Thinking |Chief Digital Officer | Chairman & MD, BT&BT | Chairman, Open Digital Innovation WG, IET India | Speaker | Author| Social Entrepreneur

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